Credit Suisse shares fall after Saudi backer rules out further aid

Shares of Swiss credit Wednesday plunged to a new all-time low for the second day in a row after a top investor in the troubled Swiss bank said it would no longer be able to provide more liquidity due to regulatory restrictions.

Trading in the bank’s plummeting shares was halted several times throughout the morning as it fell below 2 Swiss francs ($2.17) for the first time.

Swiss-listed Credit Suisse shares ended the session down 24%, paring some of their earlier losses after falling more than 30% at one point. Credit Suisse’s American Certificates of Deposit traded in the United States fell 20%.

After European markets closed, Bloomberg News reported that Swiss regulators were exploring options to stabilize Credit Suisse.

The share price rout renewed a sell-off among European lenders, who were already facing significant market turmoil following the Silicon Valley Bank fallout. Some of the biggest declines included France Societe Generalespain Bank of Sabadell and that of Germany Commerzbank.

Several Italian banks were also subject to automatic trading halts on Wednesday, including UniCreditFinecoBank and Monte dei Paschi.

Credit Suisse’s biggest investor, the Saudi National Bank, said it could not provide the Swiss bank with any additional financial aid, according to a Reuters report, triggering the latest decline.

“We can’t because we would go over 10%. It’s a regulatory problem,” Saudi National Bank chairman Ammar Al Khudairy told Reuters on Wednesday. However, he added that the SNB was happy with Credit Suisse’s transformation plan and suggested the bank was unlikely to need additional money.

THE Saudi National Bank takes a 9.9% stake in Credit Suisse last year as part of the Swiss lender’s $4.2 billion fundraising to fund a massive strategic overhaul aimed at improving investment banking performance and addressing a litany of risks and failings to compliance.

Credit Suisse CEO Ulrich Koerner on Wednesday sought to defend the bank’s liquidity base, saying it is “very, very strong”, Reuters reported, citing an interview with CAN.

Koerner added, “We meet and exceed virtually all regulatory requirements.”

Meanwhile, speaking to CNBC’s Hadley Gamble at a roundtable in Riyadh, Saudi Arabia on Wednesday morning, Credit Suisse Chairman Axel Lehmann declined to comment on whether his firm would need any government assistance in the future.

When asked if he would rule out some form of assist, Lehmann replied, “That’s not the point.”

“We’re regulated, we have strong capital ratios, a very strong balance sheet. We’re all on deck. So that’s not the point at all.”

The Swiss National Bank declined to comment on Credit Suisse’s share price performance, Reuters reported.

Investors also continue to assess the impact of the bank’s announcement on Tuesday that it found “material weaknesses” in its financial reports process for 2022 and 2021.

Switzerland’s second-biggest lender disclosed the sighting in its annual report, which was originally scheduled for last Thursday but was delayed by a late appeal from the United States Securities and Exchange Commission.

The conversation with the SEC related to a “technical assessment of previously disclosed revisions to the consolidated cash flow statements for the years ended December 31, 2020 and 2019, and related controls.”

At the end of 2022, the bank disclosed that it was seeing “significantly higher cash deposit withdrawals, non-renewal of maturing term deposits and net asset outflows at levels that significantly exceeded the rates incurred at third quarter of 2022″.

Credit Suisse recorded client withdrawals of more than 110 billion Swiss francs in the fourth quarter as a series of scandals, legacy risks and compliance failures continued to plague it.

Correction: This story has been updated with the correct figure for the Credit Suisse capital increase.